Labour’s policies and how they could affect the charity sector

Labour’s campaigning in the run-up to the general election, along with the proposed new legislation set out in the King’s Speech last week, will have many charity trustees wondering about the impact of the new UK Government on their organisations and operations.

Below, we consider a number of Sir Keir Starmer’s manifesto promises and policy proposals, which, if enacted, will directly or indirectly impact the sector.

Employment rights

Many charity employers will be interested to understand the scope and detail of the proposed new Employment Rights Bill. To be enacted as part of Labour’s “New Deal for Working People”, new legislation affecting sick pay, parental leave, and unfair dismissal, as well as banning zero hours contracts, will need to be considered by charities employing staff.

Energy and environment-related changes

Labour’s stated commitment to making Britain a clean energy superpower, provide clean power by 2030, and accelerate to net zero could have a significant impact on environmental charities and those working on climate change and clean energy. It has been suggested that increased government funding and partnership opportunities could be available for these organisations. Trustees of charities in this space will look forward to seeing the contents of the Great British Energy Bill that was mentioned in the King’s Speech.

English Devolution Bill: what it means for local charities

The new Government’s proposed English Devolution Bill looks set to provide new powers to the “metro mayors” and the combined authorities, in a move that many charities anticipate will have a broader impact on how they work and raise funds. These changes signify a transfer of powers relating to energy, transport, and skills away from Westminster, and could mean an opportunity for local charities to engage more easily with leaders and politicians closer to where they operate. The proposed “community right to buy” (allowing local communities to purchase valued community assets) will also be an interesting development for local community-based charities.

Removal of the VAT exemption for charitable independent schools

Labour’s proposal to remove the VAT exemption on independent school fees caught the headlines ahead of the election, and many trustees and governors of charitable independent schools will have been preparing for its impact for some time. While the detail of the new legislation required to make this change hasn’t yet been set out, it is likely to be difficult for most private schools to avoid raising the fees charged to parents to accommodate this change.

Health and social care plans

Many charities with purposes focusing on mental health will be keen to see the proposed reforms to the Mental Health Act, which promise to “redress the balance of power between patient and professionals”. One interesting omission from the King’s Speech however was any mention of adult social care, which some charities were quick to notice (and some to criticise). The new Government’s plans in this area haven’t yet been set out in detail, although reform to social care did feature prominently in Labour’s election manifesto (which sketched out a proposed new National Care Service).

Housing and property proposals

Charities focused on housing will be interested in the Renters Rights Bill, which is set to provide greater protection for tenants renting homes. This legislation, along with proposed new laws on leasehold and commonhold property ownership, could also impact charities which themselves own property either for investment or as part of furthering their charitable purposes.

While many of the new Government’s plans are by necessity not yet detailed enough to afford the sector much scrutiny, it’s clear that Labour intends to pursue policies that will affect both the way charities approach their missions as well as how they conduct their internal operations. Charities broadly and operating in specific areas will be looking closely to see how many manifesto promises turn into concrete legislation.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, July 2024